Addressing Nigeria’s power tariff adjustment

The power sector in Nigeria has recently been a topic of great concern, with the Organized Private Sector raising alarms over the impact of the country's recent electricity tariff hike on businesses and households. This tariff adjustment has been met with mixed reactions, as some see it as a necessary step to address the sector's long-standing challenges, while others fear it may push many businesses to the brink of shutdown. The Nigeria Electricity Regulatory Commission has estimated that a whopping 3.2 trillion naira subsidy would be required if the tariff hike were to be reversed this year, further underlining the complexities of the situation. To shed light on these issues, Oti Ikomi, the CEO of Proton Energy, recently sat down with CNBC Africa to discuss Nigeria's tariff regime and the persistent challenges facing its power supply. Ikomi emphasized the need for a balanced approach that takes into account the interests of all stakeholders involved in the sector. He highlighted the importance of making tough decisions while ensuring consistency to achieve the desired results. One such decision was the implementation of service-based tariffs, which guarantee a minimum number of hours of electricity supply per day for consumers. While acknowledging the initial shock of the tariff hike, Ikomi urged consumers to hold distribution companies accountable for meeting these commitments. He also emphasized the role of monitoring systems in tracking power supply and ensuring compliance by service providers. Despite the challenges posed by the tariff adjustment, Ikomi sees potential for increased investment in the sector. He pointed out that a cost-reflective tariff is essential for businesses to recover their costs and attract investors. The recent interest shown by companies like Transcorp Power and Seplat Energy in the sector indicates a growing optimism towards future opportunities. However, Ikomi highlighted the need for comprehensive solutions that address not only tariff issues but also other critical aspects of the power sector, such as gas supply, transmission, and distribution infrastructure. While there is still much work to be done, Ikomi remains hopeful about the prospects for the sector and the potential for growth, particularly in renewable energy sources. As Nigeria navigates the complexities of its power sector, collaboration between industry players, regulators, and consumers will be crucial in overcoming challenges and unlocking the sector's vast potential for sustainable growth. The road ahead may be challenging, but with strategic planning and collective effort, Nigeria's power sector could pave the way for a brighter energy future.